Best Stocks Under $10
When looking to invest, companies can be attractive for a great many reasons. New innovations on the way, strong pedigree, good management, growth opportunity, etc. But one of the qualities that should not be overlooked is the barrier to entry. That’s what makes the best stocks under $10.00 list such an attractive proposition for many investors.
You see, a stock like Amazon.com, Inc. (NASDAQ:AMZN) is great; there’s no denying that. The company has a strong history of delivering big gains to its investors, its technology is growing, and its business is constantly expanding into a number of areas that are probably going to pay off big returns both in the near term and long term. The one caveat? AMZN stock is expensive. Really expensive.
At well over $900.00 per share and unlikely to drop in value any time soon (barring an Amazon stock split), you have what is a very onerous barrier to entry.
Sure, the average investor could cobble together some cash to purchase several AMZN shares, but then you’re limiting the rate of your return. It’s why penny stocks are so attractive to investors. You can get a ton of them for a low price, thereby giving you a much larger potential gain.
Of course, there’s a reason why Amazon stock is nearly $1,000 per share, and penny stocks are worth, well, pennies. Amazon is a proven tech titan with years of success behind it, a massive market cap, and assets to justify its price.
Penny stocks are unproven, and are obviously many magnitudes smaller. They’re more like young upstarts than established giants.
And that’s what makes a lot of the best stocks under $10.00 so tantalizing: the ability to get in on the ground floor.
Companies that are worth pennies today might be worth a few dollars tomorrow. That may not seem like much but, in reality, those are returns of hundreds—sometimes thousands—of percentage points. Of course, not all penny stocks are destined for such success, but investors who like to play around with the lower-end shares do so because of this strong upside.
How to Invest in Penny Stocks
While the list later in this article will be looking at more than just penny stocks, for investors looking to get into the market on the cheap, they should know a thing or two about penny stocks.
As I explained earlier, there isn’t a whole lot of mystery behind penny stocks. The name pretty well sums up everything you need to know. But the bigger question is, how do you identify the best penny stocks to invest in? That is a little more difficult.
There are a lot of great stocks that rose from pennies to be worth far more (relatively), but let’s focus on an industry that is very much in the news these days: marijuana stocks.
The industry is surging (and one of the stocks that made the list hails from greener pastures), but it wasn’t always that way. Many marijuana stocks that started out with penny valuations have now ballooned to be worth several dollars.
Aphria Inc. (CVE:APH, TSE:APH) was, up until late 2015, still under a dollar. Then, as the marijuana industry began to surge due to legislation being passed— and due to hype—the company began to grow. And grow, and grow.
Now, APH stock is worth over $6.00 a share, and all that is taking place within a year-and-a-half. That’s over a 600% return.
So, my strategy for investing in the best penny stocks is to identify an industry on the cusp of a breakout, where new technology or some other market is about to open up and, therefore, the penny stock can strive upward on hype and goodwill alone.
Of course, it doesn’t always work long-term, as hype does die down. But, finding both a low-cost company in an emerging industry—one with strong fundamentals to allow it to ride out the waves and dips—is a good way to ensure success in your stock for years to come.
Aphria is a good choice also because its growing methods (greenhouses versus open fields) allow for stability and a cheaper product, if at a cost of smaller crop production. Still, the greenhouse offers competitive advantages that not only make APH stock a good choice for now while it’s cheap, but also in the future, as the company plans to maintain a foothold in the marijuana industry.
Best Stocks Under $10 List
With all that said and done, let’s get to the top three stocks under $10.00 list.
1. Aphria Inc. (CVE:APH, TSE:APH)
No surprise here, after I just lauded what a great company I believe APH to be.
Operating in the surging marijuana market makes Aphria Inc. (CVE:APH, TSE:APH) one of the better stocks in an industry that has already seen massive growth pretty much across the board.
But there are a few other things I haven’t mentioned yet as to why this is one of the better plays in the marijuana market and, in general, when looking at stocks under $10.00.
First, it’s a Canadian company, which is great for marijuana stocks.
Chart courtesy of StockCharts.com
Canada’s last federal election went in favor of the Liberal Party, who won with the help of a pledge to see marijuana legalized in Canada for recreational and medicinal use across the board. This type of broad and strong federal action on marijuana is rare in the current political climate.
While most western countries are easing up on their treatment of marijuana as an illicit substance, not many are as close as Canada is to bringing in federal legislation to regulate and sell the product.
APH stock is the beneficiary of the political mood in its home country, and that could translate into big gains for the shares.
Another benefit is that APH has already proven itself (somewhat) to be more than a penny stock, and yet it’s still in that sweet spot where it could see penny stock-type growth. What I mean to say is, the stock has gained enough to lend investors confidence, but not so much that’s it has transitioned to more moderate—if steady—gains.
There is still a good amount of money to be made to the investor who plays the right cards in the marijuana industry. And APH could be one of the better companies, if you want to see those big returns coupled with potential long-term stability.
2. Critical Elements Corp (CVE:CRE)
Critical Elements Corp (CVE:CRE) is a current penny stock, valued at $0.70 per share at the moment, but operating in an industry that has the potential to see large growth in the coming years.
Lithium mining is set to see strong gains in the future, due to its inclusion in lithium-ion batteries. These technological marvels power electric cars, among other things.
Chart courtesy of StockCharts.com
With many governments looking to adopt stricter regulations on gas-guzzling automobiles, coupled with mandates for auto manufacturers to ensure that their fleets attain more efficient fuel-consumption, we’ll likely see a rise in demand for raw lithium in order to keep up with the production increase.
Consider that the value of a metric ton of battery-grade lithium was $5,180 in 2011, but climbed to $6,400 in 2015. (Source: “Lithium,” U.S. Geological Survey, last accessed May 8, 2017.)
The stock has the potential to see impressive gains in an industry that has a lot going for it in the future.
The mine owned by Critical Elements Corp has a reported 26,606 tons of high purity (99.9% battery grade) over a 17-year mine life. (Source: “Critical Elements Corporation: Annual Meeting,” Marketwired, April 21, 2017.)
With companies like Tesla Inc (NASDAQ:TSLA) looking to ramp up production of all things lithium, including batteries for powering cars and the home, there’s a good chance that lithium will be a strong commodity and that CRE stock will benefit.
A final note on lithium: Tesla’s “Gigafactory” will reportedly produce lithium-ion batteries at a rate we have yet to see. In fact, Tesla CEO Elon Musk was quoted as saying that 100 Gigafactories could provide enough lithium-ion batteries to power the world. (Source: “Elon Musk: 100 Tesla Gigafactories Could Power the Entire World,” Futurism, April 16, 2017.)
Upside for CRE: that’s a lot of lithium they’ll need.
3. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Okay, I’m cheating a bit here, as Advanced Micro Devices, Inc. (NASDAQ:AMD) is technically a smidgen over $10.00, but it’s still a great buy for those looking to invest in lower-cost stocks.
AMD stocks produce chips for all manner of tech gadgets, putting it in a prime spot to take advantage of any number of emerging technologies.
Augmented reality (AR), for instance, is one such area that will likely require specialized chips or at least AR-capable chips in the future, as the computational stress from programs will necessitate innovative and stronger products.
Chart courtesy of StockCharts.com
AMD is one of those companies looking to innovate, with a slate of upcoming chips that may be able to rival some of its bigger competitors.
AMD surged in 2016, due to hype that the company could carve out a bigger foothold in the very lucrative chip-making business.
Recently, that hype cost the shares some value, as its most recent quarterly report didn’t beat expectations.
But I view this as positive for investors looking for the right time to get in. While there’s still a lot of hype, and perhaps inflated expectations in the near term, AMD has enough going for it that I believe it will be able to justify its growth. This downturn may represent one of the cheapest prices you can get in on, for what I believe is a strong tech stock in a very powerful industry.
That all helps to make AMD one of the best tech stocks under $10.